Germany will limit the number of asylum seeker arrivals to around 200,000 annually under a draft coalition agreement sealed Friday in marathon talks between the country's two biggest parties.

"We determine that the number of new arrivals... should not exceed the range of 180,000 to 220,000 per year," according to a copy of the document agreed by Chancellor Angela Merkel's conservatives and the Social Democrats obtained by AFP.

On the thorny issue of family reunions for asylum seekers granted temporary refuge, the preliminary accord says current restrictions should be loosened.

The agreement calls for parliament to pass a law by the end of July allowing 1,000 family members per month to come to Germany.

Merkel long resisted a strict upper limit on asylum seekers coming to Europe's top economy, as demanded by her CDU's Bavarian sister party, the Christian Social Union.

But after winning an election with a reduced majority in September, she agreed to a soft cap on Germany's refugee intake in a bid to silence bitter squabbling within her conservative camp.

Merkel's decision to let in more than one million people fleeing war and misery from 2015 has proved deeply divisive in Germany.

The anti-immigration Alternative for Germany capitalised on voter anger over the issue to score 12.6 percent in the general election, a record for a far-right party in the post-war period.